Former CEO of failed FTX says he’s willing to testify to Congress

Sam Bankman-Fried responds to a series of tweets from the chairwoman of the US House Financial Services Committee.

Sam Bankman-Fried during testimony for a hearing on Capitol Hill in 2021.
Sam Bankman-Fried, former CEO of FTX, tweeted on December 9, 2022, that he would be limited in what he could say to Congress but he is willing to testify [File: Alex Wong/Getty Images via AFP]

The former CEO of the failed cryptocurrency exchange FTX says in a tweet that he is willing to testify before the United States Congress next week but he will be limited in what he can say and he “won’t be as helpful” as he’d like to be.

The tweet on Friday came in response to several this month from Maxine Waters, chairwoman of the Financial Services Committee in the House of Representatives. She requested that Sam Bankman-Fried attend next week’s hearings on the collapse of FTX.

Waters, a California Democrat, said in a series of tweets to Bankman-Fried that, based on multiple media interviews since FTX collapsed, it was “clear to us that the information you have thus far is sufficient for testimony”.

FTX failed last month in what was essentially a cryptocurrency version of a bank run. Its customers tried to withdraw their assets all at once because of growing doubts about the financial strength of the company and its affiliated trading arm, Alameda Research. Since its collapse, FTX’s new management has called the cryptocurrency exchange’s management a “complete failure of corporate controls”.

Bankman-Fried has admitted his own failures in preventing the collapse.

In a series of tweets to Waters, Bankman-Fried listed specific issues he would be able to discuss with the committee, including the solvency of FTX’s US business, its American customers and possible solutions for returning assets to international clients. He also said he could talk about what he thinks led to the crash and “my own failings”.

Bankman-Fried has said he takes responsibility for FTX’s collapse and admitted he failed to grasp the amount of risk Bermuda-based FTX and Alameda were taking on across both businesses. One of the accusations made against Bankman-Fried is that he arranged for Alameda to use customers’ assets in FTX to place bets in the market. Bankman-Fried has said in public interviews that he did not “knowingly” co-mingle customers’ assets with Alameda.

Exchanges like FTX are supposed to segregate customers’ deposits from any bets they place in the markets. Other financial companies have gotten into trouble for misusing customers deposits, one example being MF Global about 10 years ago.

In a TV interview just over a week ago, Bankman-Fried said he largely believed the US affiliate of FTX was entirely solvent and could start processing withdrawals at once. As for the rest of FTX, which was significantly larger than the US division, he said the fate of customers’ funds were largely out of his control.

Bankman-Fried, who was once on paper one of the richest people in the world, now says he is getting by on a single credit card and likely has less than $100,000 to his name after FTX’s failure.

Waters has said FTX’s collapse had “harmed over one million people” and tweeted on Tuesday that if Bankman-Fried was not willing to testify, a subpoena was “definitely on the table”.

Source: AP